Question

In a taxable transaction:

a. acquiring firms generally do not write up the assets of the acquired firm.
b. shares of the acquiring firm are exchanged for the target firm's shares.
c. the shareholders of both firms realize immediate capital gains.
d. the acquiring firm has no immediate tax effects but gains valuable future depreciation tax benefits on the marked up assets.
e. the assets of both the acquiring and acquired firms are written up to their current market values.

Answer 1

In a taxable transaction, acquiring firms generally do not write up the assets of the acquired firm. Instead, shares of the acquiring firm are exchanged for the target firm's shares. The acquiring firm may gain valuable future depreciation tax benefits.

Step-by-step explanation:

In a taxable transaction, acquiring firms generally do not write up the assets of the acquired firm. Instead, shares of the acquiring firm are typically exchanged for the target firm's shares. This means that the shareholders of both firms do not necessarily realize immediate capital gains. However, the acquiring firm may gain valuable future depreciation tax benefits on the marked up assets.